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(Bloomberg) — German factory orders unexpectedly rose for a second month — a rare piece of good news for the country’s important manufacturing sector.
Demand in July advanced 2.9% from June, while economists in a Bloomberg survey had estimated a 1.7% drop. The prior month also was stronger than initially reported, clocking in at 4.6% instead of 3.9%
The uptick was due to large-scale orders, without which the gauge would have dropped 0.4%, the German statistics office said Thursday in a statement.
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The industrial sector of Europe’s biggest economy has been stuck in a rut, with business surveys by S&P Global confirming this week that the downturn that started in mid-2022 extended into August.
Subdued foreign demand is a key source of the weakness, but there are also concerns about a loss of competitiveness to China. Its manufacturers are increasingly challenging German firms that have faced elevated energy costs, high interest rates and staff shortages at home.
The latest alarm signal came this week, when Volkswagen AG announced it’s considering unprecedented plant closures in its home market. Executives defended the plans on Wednesday, telling employees that the company had lost sales of some 500,000 cars.
Germany’s output has been propped up by services, though forecasts are being revised lower after a surprise contraction in the second quarter. The Kiel Institute for the World Economy said this week that it expects gross domestic product to shrink 0.1% this year, after a 0.3% drop in 2023.
—With assistance from Joel Rinneby, Kristian Siedenburg and Mark Schroers.
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